LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (Tables)

6 Months Ended

Jun. 30, 2014

Receivables [Abstract]

Schedule of composition of loans categorized by the type of loan

The composition of loans categorized by the type of the loan, is as follows:

	June 30, 2014			December 31, 2013
Commercial, industrial, and municipal	$	127,994		$	130,220
Commercial real estate mortgage		211,126			212,850
Commercial construction and development		24,684			13,672
Residential real estate mortgage		130,740			123,980
Residential construction and development		18,366			18,277
Residential real estate home equity		23,005			20,677
Consumer and individual		3,587			3,567
Subtotals – Gross loans		539,502			523,243
Loans in process of disbursement		(11,067	)		(6,895	)
Subtotals – Disbursed loans		528,435			516,348
Net deferred loan costs		318			315
Allowance for loan losses		(6,929	)		(6,783	)
Net loans receivable	$	521,824		$	509,880

Schedule of impaired loans

The following is a summary of information pertaining to impaired loans at period-end:

	June 30, 2014		December 31, 2013
Impaired loans without a valuation allowance	$	12,118	$	9,303
Impaired loans with a valuation allowance		8,223		6,472
Total impaired loans before valuation allowances		20,341		15,775
Valuation allowance related to impaired loans		2,704		2,108
Net impaired loans	$	17,637	$	13,667

Schedule of allowance for loan losses

Activity in the allowance for loans losses during the six months ended June 30, 2014 follows:

Allowance for loan losses:	Commercial			Commercial Real Estate			Residential Real Estate			Consumer			Unallocated		Total
Beginning Balance	$	2,828		$	2,653		$	1,223		$	79		$	—	$	6,783
Provision (credit)		(572	)		(87	)		949			(10	)		—		280
Recoveries		4			—			4			4			—		12
Charge offs		(28	)		—			(117	)		(1	)		—		(146	)
Ending balance	$	2,232		$	2,566		$	2,059		$	72		$	—	$	6,929

Activity in the allowance for loans losses during the six months ended June 30, 2013 follows:

Allowance for loan losses:	Commercial			Commercial Real Estate			Residential Real Estate			Consumer			Unallocated		Total
Beginning Balance	$	3,014		$	2,803		$	1,511		$	103		$	—	$	7,431
Provision		252			336			73			14			—		675
Recoveries		2						2			10			—		14
Charge offs		(130	)		(27	)		(283	)		(40	)		—		(480	)
Ending balance	$	3,138		$	3,112		$	1,303		$	87		$	—	$	7,640

The following tables provide other information regarding the allowance for loan losses and balances by type of allowance methodology.

	At June 30, 2014
			Commercial		Residential
Allowance for loan losses:	Commercial		Real Estate		Real Estate		Consumer		Unallocated		Total
Individually evaluated for impairment	$	1,207	$	630	$	843	$	24	$	—	$	2,704
Collectively evaluated for impairment		1,025		1,936		1,216		48		—		4,225
Total allowance for loan losses	$	2,232	$	2,566	$	2,059	$	72	$	—	$	6,929
Loans receivable (gross):
Individually evaluated for impairment	$	11,166	$	5,513	$	3,637	$	25	$	—	$	20,341
Collectively evaluated for impairment		116,828		230,297		168,474		3,562		—		519,161
Total loans receivable (gross)	$	127,994	$	235,810	$	172,111	$	3,587	$	—	$	539,502

	At December 31, 2013
			Commercial		Residential
Allowance for loan losses:	Commercial		Real Estate		Real Estate		Consumer		Unallocated		Total
Individually evaluated for impairment	$	1,167	$	695	$	228	$	18	$	—	$	2,108
Collectively evaluated for impairment		1,661		1,958		995		61		—		4,675
Total allowance for loan losses	$	2,828	$	2,653	$	1,223	$	79	$	—	$	6,783
Loans receivable (gross):
Individually evaluated for impairment	$	8,102	$	5,527	$	2,129	$	17	$	—	$	15,775
Collectively evaluated for impairment		122,118		220,995		160,805		3,550		—		507,468
Total loans receivable (gross)	$	130,220	$	226,522	$	162,934	$	3,567	$	—	$	523,243

Schedule of loans by credit exposure

The commercial credit exposure based on internally assigned credit grade at June 30, 2014, follows:

			Commercial		Construction
	Commercial		Real Estate		& Development		Agricultural		Government		Total
High quality (risk rating 1)	$	202	$	—	$	—	$	—	$	—	$	202
Minimal risk (2)		22,682		16,790		124		1,693		70		41,359
Average risk (3)		55,189		135,820		19,760		3,072		6,373		220,214
Acceptable risk (4)		23,569		44,858		3,036		514		311		72,288
Watch risk (5)		2,455		7,151		1,629		11		—		11,246
Substandard risk (6)		687		1,129		—		—		—		1,816
Impaired loans (7)		8,196		5,378		135		125		2,845		16,679
Total	$	112,980	$	211,126	$	24,684	$	5,415	$	9,599	$	363,804

The commercial credit exposure based on internally assigned credit grade at December 31, 2013, follows:

			Commercial		Construction
	Commercial		Real Estate		& Development		Agricultural		Government		Total
High quality (risk rating 1)	$	44	$	—	$	—	$	—	$	—	$	44
Minimal risk (2)		24,085		19,249		120		1,115		78		44,647
Average risk (3)		51,745		145,673		8,863		2,563		6,512		215,356
Acceptable risk (4)		26,395		34,154		2,917		424		357		64,247
Watch risk (5)		8,146		7,572		1,632		—		—		17,350
Substandard risk (6)		654		815		—		—		—		1,469
Impaired loans (7)		4,860		5,387		140		152		3,090		13,629
Total	$	115,929	$	212,850	$	13,672	$	4,254	$	10,037	$	356,742

The consumer credit exposure based on payment activity and internally assigned credit grade at June 30, 2014, follows:

	Residential-		Construction and		Residential-
	Prime		Development		HELOC		Consumer		Total
Performing	$	127,683	$	18,195	$	22,596	$	3,562	$	172,036
Impaired loans		3,057		171		409		25		3,662
Total	$	130,740	$	18,366	$	23,005	$	3,587	$	175,698

The consumer credit exposure based on payment activity and internally assigned credit grade at December 31, 2013, follows:

	Residential-		Construction and		Residential-
	Prime		Development		HELOC		Consumer		Total
Performing	$	122,408	$	18,230	$	20,167	$	3,550	$	164,355
Impaired loans		1,572		47		510		17		2,146
Total	$	123,980	$	18,277	$	20,677	$	3,567	$	166,501

Schedule of payment age analysis of loans receivable

The payment age analysis of loans receivable disbursed at June 30, 2014, follows:

	30-59		60-89		90+		Total				Total		90+ and
Loan Class	Days		Days		Days		Past Due		Current		Loans		Accruing
Commercial:
Commercial and industrial	$	606	$	499	$	277	$	1,382	$	111,598	$	112,980	$	—
Agricultural		22		—		125		147		5,268		5,415		—
Government		—		—		—		—		9,599		9,599		—
Commercial real estate:
Commercial real estate		788		190		823		1,801		209,325		211,126		—
Commercial construction and development		329		—		17		346		15,813		16,159		—
Residential real estate:
Residential – Prime		445		253		1,776		2,474		128,266		130,740		—
Residential – HELOC		31		28		192		251		22,754		23,005		—
Residential – construction and development		185		—		127		312		15,512		15,824		—
Consumer		6		7		9		22		3,565		3,587		—
Total	$	2,412	$	977	$	3,346	$	6,735	$	521,700	$	528,435	$	—

The payment age analysis of loans receivable disbursed at December 31, 2013, follows:

	30-59		60-89		90+		Total				Total		90+ and
Loan Class	Days		Days		Days		Past Due		Current		Loans		Accruing
Commercial:
Commercial and industrial	$	297	$	57	$	610	$	964	$	114,965	$	115,929	$	—
Agricultural		—		—		152		152		4,102		4,254		—
Government		—		—		—		—		10,037		10,037		—
Commercial real estate:
Commercial real estate		376		547		1,276		2,199		210,651		212,850		—
Commercial construction and development		—		—		—		—		11,434		11,434		—
Residential real estate:
Residential – prime		369		87		335		791		123,189		123,980		—
Residential – HELOC		45		14		314		373		20,304		20,677		—
Residential – construction and development		37		—		—		37		13,583		13,620		—
Consumer		2		10		9		21		3,546		3,567		—
Total	$	1,126	$	715	$	2,696	$	4,537	$	511,811	$	516,348	$	—

Schedule of impaired loans, by loan class

Impaired loans as of June 30, 2014, and during the six months then ended, by loan class, follows:

	Unpaid						Average		Interest
	Principal		Related		Recorded		Recorded		Income
	Balance		Allowance		Investment		Investment		Recognized
With no related allowance recorded:
Commercial & industrial	$	5,257	$	—	$	5,207	$	4,034	$	127
Commercial real estate		2,951		—		2,726		2,551		36
Government		2,845		—		2,845		2,968		72
Residential – prime		1,379		—		1,223		1,045		8
Residential – HELOC		116		—		115		113		2
Consumer		2		—		2		1		—
With an allowance recorded:
Commercial & industrial	$	3,240	$	1,167	$	2,989	$	2,494	$	18
Commercial real estate		2,887		602		2,652		2,832		2
Commercial construction & development		137		28		135		138		3
Agricultural		127		40		125		139		—
Residential – prime		1,843		664		1,834		1,270		13
Residential – HELOC		309		141		294		347		—
Residential construction & development		174		38		171		109		1
Consumer		24		24		23		20		—
Totals:
Commercial & industrial	$	8,497	$	1,167	$	8,196	$	6,528	$	145
Commercial real estate		5,838		602		5,378		5,383		38
Commercial construction & development		137		28		135		138		3
Agricultural		127		40		125		139		—
Government		2,845		—		2,845		2,968		72
Residential – prime		3,222		664		3,057		2,315		21
Residential – HELOC		425		141		409		460		2
Residential construction & development		174		38		171		109		1
Consumer		26		24		25		21		—

The impaired loans at December 31, 2013, and during the year then ended, by loan class, follows:

	Unpaid						Average		Interest
	Principal		Related		Recorded		Recorded		Income
	Balance		Allowance		Investment		Investment		Recognized
With no related allowance recorded:
Commercial and industrial	$	2,906	$	—	$	2,861	$	2,172	$	135
Commercial real estate		2,555		—		2,376		1,740		85
Commercial construction and development		1		—		—		—		—
Government		3,090		—		3,090		1,545		150
Residential – Prime		979		—		866		845		14
Residential – HELOC		110		—		110		55		3
With an allowance recorded:
Commercial and industrial	$	2,231	$	1,112	$	1,999	$	2,813	$	43
Commercial real estate		3,143		621		3,011		2,955		81
Commercial construction and development		142		74		140		171		8
Agricultural		152		55		152		153		—
Residential – Prime		749		101		706		1,085		9
Residential – HELOC		412		119		400		453		5
Residential construction and development		49		8		47		100		1
Consumer		19		18		17		22		—
Totals:
Commercial and industrial	$	5,137	$	1,112	$	4,860	$	4,985	$	178
Commercial real estate		5,698		621		5,387		4,695		166
Commercial construction and development		143		74		140		171		8
Agricultural		152		55		152		153		—
Government		3,090		—		3,090		1,545		150
Residential – Prime		1,728		101		1,572		1,930		23
Residential – HELOC		522		119		510		508		8
Residential construction and development		49		8		47		100		1
Consumer		19		18		17		22		—

Schedule of loans on nonaccrual status

Loans on nonaccrual status at period-end, follows:

	June 30, 2014		December 31, 2013
Commercial:
Commercial and industrial	$	2,738	$	1,575
Agricultural		125		152
Commercial real estate:
Commercial real estate		4,039		4,103
Commercial construction and development		17		17
Residential real estate:
Residential – prime		2,224		1,059
Residential – HELOC		309		387
Residential construction and development		155		30
Consumer		25		17
Total	$	9,632	$	7,340

Schedule of modifications of troubled debt

The following table presents information concerning modifications of troubled debt made during the quarter ended June 30, 2014:

		Pre-modification		Post-modification
	Number of	outstanding recorded		outstanding recorded
As of June 30, 2014	contracts	investment		investment at period-end
Commercial & industrial	4	$	1,192	$	1,160
Commercial real estate	1	$	490	$	460

The following table presents information concerning modifications of troubled debt made during the six months ended June 30, 2014:

				Post-modification
		Pre-modification		outstanding
		outstanding		recorded
	Number of	recorded		investment
As of June 30, 2014	contracts	investment		at period-end
Commercial & industrial	1	$	1,252	$	1,218
Commercial real estate	1	$	490	$	460
Residential real estate - prime	2	$	309	$	183

The following table presents information concerning modifications of troubled debt made during the quarter ended June 30, 2013:

		Pre-modification		Post-modification
	Number of	outstanding recorded		outstanding recorded
As of June 30, 2013 ($000s)	contracts	investment		investment at period-end
Commercial & industrial	2	$	358	$	354
Residential real estate - prime	1	$	90	$	90

The following table presents information concerning modifications of troubled debt made during the six months ended June 30, 2013:

				Post-modification
		Pre-modification		outstanding
		outstanding		recorded
	Number of	recorded		investment
As of June 30, 2013 ($000s)	contracts	investment		at period-end
Commercial & industrial	3	$	396	$	390
Commercial real estate	2	$	221	$	214
Residential real estate - prime	1	$	90	$	90

The following table outlines past troubled debt restructurings that subsequently defaulted within twelve months of the last restructuring date. For purposes of this table, default is defined as 90 days or more past due on restructured payments.

	Number of	Recorded
Default during the quarter ended June 30, 2014 (000s)	contracts	investment
Residential real estate – prime	1	$	296

	Number of	Recorded
Default during the six months ended June 30, 2014 ($000s)	contracts	investment
Commercial and industrial	1	$	55
Commercial real estate	2	$	124
Residential real estate – prime	2	$	380

	Number of	Recorded
Default during the quarter ended June 30, 2013 (000s)	contracts	investment
None

	Number of	Recorded
Default during the six months ended June 30, 2013 ($000s)	contracts	investment
Commercial real estate	1	$	74
Residential real estate – prime	1	$	90